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Why Liberty Oilfield Services Stock Is Tumbling Today

By Matthew DiLallo – Oct 27, 2021 at 4:06PM

Key Points

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Investors didn't like what the oilfield service company had to report.

What happened

Shares of Liberty Oilfield Services (LBRT -1.39%) had slumped nearly 15% by 2:45 p.m. EDT on Wednesday. Weighing on the oilfield service stock was its third-quarter report. 

So what

Liberty Oilfield Services reported revenue of $654 million, which was up 12% from the second quarter. However, it posted a net loss of $39 million, or $0.22 per share, which missed analysts' expectations. The consensus estimate was that it would report a loss of $0.08 per share. 

The silhouette of a person next to an oil well.

Image source: Getty Images.

On a positive note, Liberty benefited from higher activity levels and service pricing during the period, which drove the sequential revenue growth. However, cost inflation and the pandemic's impact on global supply chains and labor availability impacted margins. The company noted that costs rose faster than it could raise its prices. It estimates that it wasn't able to pass $12 million of logistics costs through to customers in the quarter because they rose so rapidly.  

Liberty also unveiled that it acquired PropX for $90 million. It's a leading last-mile provider of proppant delivery solutions in North America, including proppant handling equipment and logistics software. Liberty believes PropX will help reduce the environmental impact and cost of well completions for its customers. 

Now what

Liberty Oilfield Services continues to feel margin pressure. Lower activity levels over the past year due to weaker oil prices had put pressure on its pricing. While that headwind is fading, a new one has emerged in cost inflation. The company expects this issue to persist through the fourth quarter, though it's actively looking for ways to mute its impact. That new headwind could keep the pressure on Liberty's stock price in the near term. 

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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